Ch. 2: Nothing like a new car

That's good news for automakers that have invested across the board in developing fuel-efficient models, including a fast-growing number of gasoline-electric hybrids.

A new generation of the Toyota Prius went on sale in the spring. It's still king of the hill in U.S. hybrid sales, but it has new competition in an all-new Honda Insight hybrid. Luxury brands, including Mercedes-Benz and Lexus, have also said they are adding more hybrids to their mix of vehicles.

Hybrids today have a conventional, internal-combustion engine and an electric motor that runs on battery power.

Hybrids can drive on battery power, gasoline-engine power or both. When the battery needs recharging, the conventional motor acts like a generator to recharge the battery. Some energy to recharge the battery is also recovered during braking. When a hybrid's special "regenerative" brakes are applied, they, in effect, spin a small generator.

The energy needed to drive today's hybrids, including the charge in the battery, ultimately comes from gasoline and the on-board gasoline engine.

In the works now are so-called "plug-in" hybrids that will have the capability of recharging from an on-board conventional engine or from an ordinary household current, according to General Motors. A household current is a much cheaper way to buy energy than recharging from a gasoline engine that's acting as a generator. The Chevrolet Volt, which goes on sale in late 2010 as a 2011 model, is expected to be the first mass-market, plug-in hybrid, according to GM.

Hybrids rely more heavily on battery power at start-up and at low speeds, so unlike conventional cars, most hybrids get better mileage in city driving than in highway driving, according to EPA estimates.

In addition to gasoline-electric hybrids, other fuel-saving technologies on the market today include improved diesel-engine cars. Before last year, diesels couldn't be sold in California or other states with tougher emissions regulations, including the Northeast's large markets.

That meant it wasn't a paying proposition for European -- read, German -- automakers to offer diesels in the U.S., even though diesel engines regularly get about 25 percent to 30 percent more miles per gallon than gasoline engines, according to German carmaker Volkswagen AG.

According to a 2002 statement from John Dingell of the House Energy and Commerce Committee, those same clean-burning diesels are estimated to account for 75 percent of light-duty vehicles sold in Europe in 2010.

A couple of additional factors have kept clean-diesel technology from catching on in the U.S. before now. First, fuel prices are several times higher in Europe than they are here, which makes Europeans much more concerned about fuel economy than Americans. Second, government regulations in Europe in 2005 mandated cleaner diesel fuel, with less sulfur content than the diesel fuel sold in the U.S. In contrast, California led the way here, targeting toxic nitrogen oxide and so-called particulates, which contribute to smog but were not covered by Europe's standards.

Meanwhile, business conditions in the U.S. market have the potential to become more diesel-friendly. U.S. fuel prices spiked last fall, making U.S. consumers more conscious of fuel economy. In addition, the price of diesel fuel relative to regular gasoline has come down in the last year. A year ago, diesel was not only much pricier, it was more expensive per gallon than premium gasoline. Today, diesel is about the same as regular gas.

The U.S. government joined Europe in adopting cleaner, low-sulfur diesel fuel standards in 2006. Also, German automakers came up with better diesel emissions controls, which started reaching the U.S. market last year. So today, diesels can be sold in all 50 states. If diesel catches on in the U.S., that could be an advantage for German brands such as Volkswagen over those from Japan, as diesel isn't popular in Japan.

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At the same time that Americans are demanding better fuel efficiency, the U.S. government is hiking Corporate Average Fuel Economy, or CAFE, standards to 35 miles per gallon by 2020, an increase of 40 percent from the current level.

Those forces have the car companies pursuing fuel efficiency on many fronts, even if the gains in fuel efficiency aren't as dramatic as hybrids. For instance, direct-injection gasoline engines get more power out of a given amount of fuel, and Ford and GM say they are both rolling out direct-injection gasoline engines in pursuit of better gas mileage and performance.

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